Resuscitated MSUA Conference Ponders Industry’s Future Health
There was certainly plenty of give-and-take, even if no consensus as to where the market was going. But the disparity of opinion was definitive about one thing, at least: When it comes to the future of mobile satellite services (MSS), even the captains of the industry are uncertain what’s the Next Thing.
Consider it an industry in search of a tipping point: Balancing between the promise of a bright technological horizon yet to be realized, and the stark financial lessons of a decade ago which some companies – those still in existence, anyway – remain mindful of, what might the future hold for the mobile satellite services industry?
For an event being held for the first time in five years, that was the question of the closing panel discussion among MSS industry leaders gathered at the fourth Mobile Satellite Users Association (MSUA) International Conference and Exhibition held May 21 to 23 in Baltimore.
The sponsoring organization, MSUA is dedicated to promoting the interests of the users of MSS worldwide. It serves the interests of MSS users by fostering communications among and between users, suppliers and operators.
Represented were each Globalstar, TerreStar, ICO, Iridium, MSV and Inmarsat. in a discussion which at times became tendentious.
MSV’s John Mattingly brimmed with optimism for what he described as his company’s chance "to develop the greatest satellite system in the world."
He said MSV has "the biggest, baddest-ass satellites in the world," and touted that, come January 2010, "we will outperform anything in the marketplace." MSV last week announced it had earned another more than 70 U.S. patents with more than 100 more pending applications in the U.S. and abroad.
"What differentiates us in a marketing point of view is the commercial market, he said, adding that "we’re going through a technological change. Google had vision. Microsoft had vision. Not all of them worked, but some of them did. It’s a niche market? So you build niches upon niches."
More conservatively, Inmarsat’s Leo Mondale replied "we’re in a cycle with a lot of people participating [in the market]. In the U.S., there may be six mobile systems. I think everyone here will offer a handheld. Systems are enabling in ways that are exciting. We’re at the edge of a dramatic shift and a profusion of devices and competition, with prices coming way down. Mobile satellite services will be the choice of last resort to those with connectibility or mobility requirements. You’ll continue to see growth; we think the industry will chug away as it has been, with smaller and cheaper terminals with dramatic improvement for users."
Yet he warned that while "I don’t doubt that you will move into the market, we’re just not that optimistic. There’s a difference between a real company and a paper company."
Mondale reminded Mattingly that, while the latter welcomed the advent of ancillary terrestrial service (ATC) as being "on the way," it’s still early to be taking ATC for granted.
"The physics are [known]. Satellite phones don’t work in cars, they don’t work under trees, they don’t work under a sheet of paper," Mondale said. "We have to let people know that as a consumers their expectations are not such that they think a satellite phone works like a cell phone. I’d like to make certain not to set expectations so high as to disappoint."
Meanwhile TerreStar’s Bob Brumley, too, saw ATC as the key to the industry’s growth. He said his company is in the midst of testing the technology, in which a company uses its authorized satellite radio frequencies to integrate with its satellite service offerings a terrestrial wireless service similar to, but more limited than, cellular or PCS. Doing so allows a company to enhance its coverage in urban areas, where buildings or other line-of-sight impediments can physically block satellite signals.
While saying that TerreStar’s research "will mitigate the physics" described by Mondale, Brumley added "we have to move as an industry from just connecting a phone call," suggesting that the ability to provide whole new data systems "is going to stretch the legs of this business."
"In sum, the physics are there, we know the physics challenges are there; but our system design accounts for that," Brumley said.
He said the differences in opinion aren’t so much a matter of science as philosophy. "What you have here is a classic example of incumbents versus newcomers." Brumley concluded "competition is coming, and the consumers will benefit."
He said his company’s smartbuild plan has identified as many as 10 different markets.
ICO’s Craig Jorgens said his company, too, was seeking other revenue streams. He said his company’s goal is to provide 10 to 15 channels of live video plus interactive video. He expected to conduct trials of the interactive service in 2008, with commercial service to start right afterward.
"I think there’s room in expanding market services for lots of interesting products," Jorgens said, "whether terrestrial or satellite."
Will Kraus, Iridium’s director of marketing, said "you can build a system to sustain an earthquake and provide for first responders, but you can’t make them a [sustainable] business model. You make a sustainable business model through user experience, how much they’ll pay, and how long they stay with a service."
Kraus said "we’ve built our business piece by piece to become one with 183,000 customers who we see use us every day. It’s a lot easier to write the business plan than close on the business plan. What’s actually worked for us is folks who have the demonstrated need (remote) and have a willingness to pay for the service."
Kraus forecast "single-digit growth, but off a very large base." He added "we just passed $212 million in revenue by growing organically and serving the base. I think that’s very different than leveraging a $30,000 to a $1 million company.
"Iridium bought assets out of bankruptcy and did it by building a business piece by piece, not by painting a picture."
Mattingly remained undeterred. "It’s the new generation of satellites and ATC that will determine how to implement these networks over the next five or 10 years; while we can’t say exactly, the inevitable is the inevitable. Any one who wants to stand in front of that train is welcome to try."
Insisting that he has seen testing produce performance, he said MSV is "going to do for $1 billion what other did for $5 billion or $7 billion. For me, being in the business for 25 years, what sets MSV apart is our vision and assets. If it sounds like ’95, the difference is that we have the goods."